At a time when the banking, financial services and insurance (BFSI) sector across the world is going slow when it comes to technology spend in the wake of the global recession, Life Insurance Corporation (LIC) of India -- the country's largest player in the life insurance segment -- is soon expected to float a tender for a Rs 200-300 crore IT outsourcing contract -- the bid document for which is expected to be submitted on the 15th of this month.
Most of the major Indian IT services providers, including Tata Consultancy Services (TCS), Wipro, Satyam Computer Services and HCL Technologies, according to sources, are in the process of bidding for the contract.
LIC is understood to be planning to modernise its existing front-end application package (FEAP) which is COBOL-based, to make it accessible through the web which will help the firm to reduce the cost of running the applications to a great extent.
When contacted, an LIC spokesperson confirmed: "We are planning to modernise the existing system but the tenders are yet to be completed. Hence we would not like to say much."
"As the applications will be accessible through the Web, the load on the servers will come down, and the processing time will also improve. The processing will happen on the desktop and the cost of running the applications will come down drastically, as it won't require to run the applications on Mainframe," said a high-level source, close to the development. Part of the investment will also go towards increasing the bandwidth and installing new hardware and software solutions.
"While the insurance major has a commendable network presence, they are increasing the bandwidth and hence will invest in hardware and software solutions," another source added.
It is learnt that while issuing the bid proposal, LIC had wanted the participating companies to meet certain criteria which include the bidder to be at least Rs 1,000 crore in size (revenue), and should have at least 1,500 dedicated people working on legacy modernisation related projects relating to banking sector. LIC wants the whole modernisation to be completed within 9-12 months, thus wants the IT vendor capable of providing whatever resources required well in time to avoid the delay, it added.
It makes sense for Indian IT firms, including TCS, Wipro, Satyam and HCL to bid for the contract since they are bullish on the domestic insurance space. Wipro, for instance, has a dedicated team of about 3,500 technology and business professionals for insurance sector. So has Satyam, which has already worked with a few insurance companies in the US and Australia for legacy applications modernisation and maintenance.
"We have established a vertical purely focussed on Insurance, and have announced outcome-based payment," said a high-level source in the company.
After submission of the bid, LIC will go for a technical evaluation of the bid. The finalisation of the contract is expected to be completed by the end of January next year.
